T-Mobile Is Creeping Into Verizon’s Rear-View

Increased competition in the U.S. wireless industry has yet to put even a blemish on industry leader Verizon Wireless – but it’s getting closer.

Getty Images

The nation’s largest carrier by subscribers said Tuesday it added 1.57 million of the most lucrative contract customers in the last three months of the year, besting resurgent rival T-Mobile, which said this month it added 869,000.

But a closer look at the data shows T-Mobile is adding nearly as many new phone subscribers as Verizon. Of Verizon’s 1.57 million additions, 824,000 were phone customers (the rest bought plans for devices like tablets). That’s just 24,000 more phone customers than T-Mobile signed up.

Where Verizon showed more mettle is in tablets: The carrier added 675,000 tablets and other Internet enabled devices, while T-Mobile added just 69,000, even though in October it began selling tablets with 200 megabytes of free data.

Overall, Verizon still maintains serious distance. It ended the year with 96.8 million contract customers, which includes phones and other devices such as tablets, while T-Mobile had just 22.3 million.

Profits are growing in Verizon’s wireless segment, and its churn – the percentage of customers leaving the carrier – continued hovering below 1%. That’s especially notable because the fourth quarter is usually when customer defections spike.

“We will continue to do what we do best, which is we add customers and we are profitable,” Verizon Chief Financial Officer Fran Shammo said during a call with analysts Tuesday.

Still, Shammo acknowledged the carrier must stay on its toes. T-Mobile said this month it would pay as much as $650 to customers that switch to T-Mobile. “Competitors do new things, and we’ll assess that, and we’ll respond accordingly,” he said in an interview.

Craig Moffett, a senior analyst at MoffettNathanson LLC, said it is only a matter of time before Verizon “will feel the pain” either in growth or margins.

“For this to be sustained will require that Verizon continues to stay out of the ugly food fight going on below, and around, them,” Moffett wrote in a research note Tuesday. “They are wearing a clean white shirt. It will be a challenge to keep it from getting dirty.”

The Saturday after T-Mobile announced it would pay early termination fees, the carrier saw a huge influx of new customers, according to Comlinkdata, a telecommunications research firm, which tracks real time switching data. That Saturday was the largest influx of customers T-Mobile had seen in all of 2013.

The only carrier that took in more customers in a single day since the beginning of 2013 was – who else – Verizon on four different occasions, according Comlinkdata.

T-Mobile declined to comment.

AT&T and Sprint report their fourth quarter results in a few weeks. Next month, T-Mobile will also release a fuller picture of its fourth-quarter earnings.